Dwight Howard Choice Pits Comcast Against Time Warner Cable

Dwight Howard, who may be close to signing a contract to join either the National Basketball Association’s Rockets or stay on with the Lakers for five more years. Photographer:Noah Graham/NBAE via Getty Images

July 5 (Bloomberg) -- In the contest to woo Dwight Howard,
it’s not just the Houston Rockets versus the Los Angeles Lakers
-- it’s Comcast Corp. against Time Warner Cable Inc.

Howard, a rebounding, shot-blocking, 6-foot-11-inch (2.1-meter) center, may be close to signing a contract to join either
the National Basketball Association’s Rockets or stay on with
the Lakers for five more years. Choosing the Rockets would give
a boost to Comcast’s Houston sports network while potentially
taking viewers from Time Warner Cable’s more popular Lakers
channel in Los Angeles.

The three-time Defensive Player of the Year may announce
his destination as soon as today, according to ESPN. By aiding
the Rockets’ championship aspirations, he would convince pay-TV
companies such as DirecTV and Dish Network Corp. to shell out
for the rights to carry Comcast’s Houston network for the first
time, said Lee Berke, president of Scarsdale, New York-based LHB
Sports, Entertainment & Media.

“If Dwight Howard goes to Houston, a lot of fans in
Houston and throughout the state are going to want to see the
Rockets play,” Berke said. “Comcast SportsNet will have more
leverage in getting deals done.”

Time Warner Cable’s Lakers networks, meanwhile, could see a
dip in ratings and advertising revenue if Howard leaves the
team, Berke said in an interview.

Comcast is the largest U.S. cable provider and owns 13
regional sports networks, more than any company other than 21st
Century Fox Inc. Time Warner Cable, the second-largest U.S.
cable operator, is pitching Howard his own TV show to add
content and value to its Lakers channel, ESPN reported.

Team Meetings

In addition to the Lakers, with whom he spent one season,
and the Rockets, Howard, 27, has talked to the Dallas Mavericks,
Golden State Warriors and Atlanta Hawks, according to ESPN.
While the Lakers have put up billboards in the L.A. area urging
him to re-sign with the team, ESPN said today that team
executives are growing increasingly concerned that Howard will
bolt, with the Warriors becoming a more serious contender vying
with the Rockets and Mavericks.

Comcast rose 1.3 percent to $41.70 at the close in New
York. Time Warner Cable was little changed at $112.36.

Comcast SportsNet Houston probably will ask for $3 to $3.50
per subscriber per month from pay-TV operators after failing to
agree on deals in 2012, Berke said. The network is jointly owned
by the Rockets, Major League Baseball’s Houston Astros and NBC
Sports Group, a Comcast unit.

Millions More

Houston is the 10th-largest U.S. pay-TV market, according
to data from research firm SNL Kagan. Comcast is the region’s
largest provider by customers, with about 684,000 video
subscribers. DirecTV, Dish, AT&T Inc.’s U-verse and Suddenlink
Communications serve a combined 1.1 million subscribers,
according to Kagan data. At $3.50 a month, Comcast could reap
about $10 million annually by striking a deal for the regional
sports network with all those providers.

The Rockets finished last season with a 45-37 record with
the core trio of James Harden, Jeremy Lin and Chandler Parsons.

While Comcast also owns the cable network that broadcasts
Warriors games, that channel is already available on DirecTV,
Dish and U-verse. Hawks and Mavericks games air on stations
owned by Fox.

Time Warner Cable SportsNet has already locked up long-term
deals with providers including DirecTV and AT&T’s U-verse last
year -- with Howard in the fold. That will soften the blow for
the New York-based company if Howard departs the Lakers, Patrick
Rishe, a sports business professor at Webster University in St.
Louis, said in an interview.

‘Rough Patch’

“It’s far more important for Comcast and Houston to obtain
Dwight Howard,” Rishe said. “The Lakers brand is solidified. I
think they may go through a rough patch, but I don’t know if
Howard would be the savior even if he signs. Howard in Houston
makes a bigger splash.”

The Lakers channel also has a Spanish-language sister
station, SportsNet Deportes.

Regional sports networks are some of the most expensive
cable channels for pay-TV operators to carry due to their strong
demand among sports fans and the high cost for broadcast rights.
Time Warner Cable agreed earlier this year to pay more than $7
billion over 25 years for the right to create a network that
airs Los Angeles Dodgers games.

Time Warner Cable SportsNet and Comcast SportsNet Houston
representatives have spoken to Howard about the media coverage
benefits they planned to offer him, according to ESPN.

Howard is a seven-time All-Star. He has averaged 18.3
points, 12.9 rebounds and 2.2 blocks per game for his career.
The Lakers are able to offer Howard a contract worth $118
million over five years, the NBA’s maximum, while the most other
teams could give him is a four-year, $88 million deal.